Asian Stocks Rebound as Yen Weakness Boosts Japan Shares
Asian stocks rose, with the regional equities gauge on course to rebound from its biggest drop in two weeks, as a weakening yen pushed Japan’s Topix index to a seven-week high and industrial companies advanced.
Toyota Motor Corp., which gets 75 percent of its auto sales outside Japan, gained 2.6 percent. BHP Billiton Ltd., the world’s largest mining company, advanced 2.1 percent in Sydney as metals prices climbed. Olympus Corp. sank 5.4 percent in Tokyo after the biggest endoscope maker said it plans to sell as much as 118 billion yen ($1.2 billion) of shares.
The MSCI Asia Pacific Index gained 1.6 percent to 131.44 as of 7:34 p.m. in Hong Kong, with all 10 industry groups on the gauge climbing. The measure fell 10 percent through yesterday from a five-year high on May 20 amid concern the U.S. Federal Reserve will begin tapering stimulus as China’s economy slows and Japan puts off unveiling economic reform policies until after upper house elections later this month.
“We are now tactically overweight on Japanese equities,” Binay Chandgothia, a fund manager at Principal Global Investors in Hong Kong, where he helps oversee $280 billion, said by telephone. “You want to be tilted toward developed markets because although growth in the west isn’t great, economic surprises have been decent and financial conditions are easier than in emerging markets.”
The MSCI Asia Pacific Index yesterday fell 1.5 percent, the most since June 24. That left the gauge trading at 12.7 times average estimated earnings compared with 14.9 for the S&P 500 and 13 times for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.
Hong Kong’s Hang Seng Index (HSI) advanced 0.5 percent. The measure fell 9.2 percent this year through yesterday, the worst among 24 developed markets tracked by Bloomberg News.
The Shanghai Composite rose 0.4 percent, having swung between gains and losses, as a report showed Chinese consumer prices rose more than forecast last month. Australia’s S&P/ASX 200 Index advanced 1.5 percent and South Korea’s Kospi index rose 0.7 percent. Singapore’s Straits Times Index added 0.7 percent and Taiwan’s Taiex Index increased 1.1 percent. New Zealand’s NZX 50 Index gained 0.7 percent.
Japan’s Topix index added 2.1 percent to close at the highest level since May 22. The gauge last week capped its biggest increase across three weeks since April 2009, amid a weakening yen and optimism Prime Minister Shinzo Abe will push through economic reforms after winning upper house elections on July 21. The yen slid 0.3 percent to 101.22 per dollar as of 5:11 p.m. in Tokyo.
Asian exporters gained. Toyota advanced 2.6 percent to 6,410 yen and Nissan Motor Co. (7201) climbed 4 percent to 1,090 yen in Tokyo. Yue Yuen Industrial (Holdings) Ltd., which makes shoes for Nike Inc., gained 1.4 percent to HK$19.78 in Hong Kong.
“Developed markets will have the upper hand for the next three to six months,” Tai Hui, Hong Kong-based chief Asia market strategist at JPMorgan Asset Management, which oversees about $1.5 trillion globally, told Bloomberg TV. “If the U.S. continues to grow, it’s demand for Asian exports is likely to improve over time as well. In the short-term, developed markets like the U.S. and Japan are going to outperform.”
Citigroup Inc., Goldman Sachs Group Inc. and China International Capital Corp. were among brokerages in the past two weeks that reduced projections for Chinese economic growth this year to 7.4 percent, below the government’s 7.5 percent goal. Alcoa Inc. chief executive officer Klaus Kleinfeld told CNBC he’s “really not concerned” about the expansion of China’s economy.
China’s statistics bureau said today consumer prices rose 2.7 percent in June. That compares with a 2.1 percent gain in May and a 2.5 percent median estimate of analysts surveyed by Bloomberg News.
Raw-material shares and industrial companies advanced. BHP Billiton gained 2.1 percent to A$31.61 and Rio Tinto Group (RIO) advanced 0.8 percent to A$52.04 in Sydney. The London Metal Exchange LMEX Metals Index gained 1.2 percent, the most in a week, in London yesterday. Komatsu Ltd., the world’s second-biggest maker of construction and mining equipment, added 3.5 percent to 2,335 yen in Tokyo.
Futures on the Standard & Poor’s 500 Index (SPX) added 0.5 percent today. The gauge advanced 0.5 percent yesterday, a third day of gains, as the start of corporate earnings season fueled increased optimism about growth in the world’s largest economy.
Olympus (7733) sank 5.4 percent to 2,928 yen. As many as 41 million shares will be sold in markets including the U.S. and Europe, the Tokyo-based company said in a statement yesterday. That amounts to 12 percent of the stock outstanding after the sale. The proceeds will also be used for capital spending and the remaining funds may be spent to repay debt.
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